COMMISSIONER OF INCOME TAX Vs. GUPTA JEWELLERS

JUDGEMENT

(1.) THIS is a reference under Section 256(1) of the Income-tax Act, 1961, at the instance of the Commissioner of Income-tax, Lucknow. The Income-tax Appellate Tribunal has referred the following two questions for the opinion of this court :

(2.) IT is in this background that the aforesaid two questions have been referred for the opinion of this court. Section 188 provides that where a firm carrying on a business is succeeded by another firm, and the case is not covered by Section 187, separate assessments have to be made on the predecessor-firm and the successor-firm. Section 187 provides for the contingency requiring one assessment when there is only a change in the constitution of the firm. IT states that where at the time of making an assessment, it is found that a change has occurred in the constitution of a firm, the assessment shall be made on the firm as it is constituted at the time of making the assessment. In CIT v. Empire Estate [1996] 218 ITR 355, the Supreme Court has held as under (page 359) :